OT - Dow plunges 1,175 - worst point decline in history

[oldpotatoe]

Originally Posted by Mr. Pink

I highly suspect that this sort of crude pump and dump (or whatever the phrase is for shorting ahead of a stupid tweet) is going on, and his family and associates are benefitting with advance warnings.

Corruption among the family of the guy who sits in the big chair? I’m shocked!!

There are some smart people who ‘could’ provide great advice for a sound fiscal policy but there’s one guy, with a tiny ego, who listens to nobody, who says and does things to either rev up his shrinking base(tariffs on Mexico) or make him think he’s a tough guy...but the USA has a spending problem made worse by a revenue problem(poorly designed ‘tax cut’), depending on a ‘booming’ economy which is slowing due to trade wars with just about everybody.

Gonna get bumpy...

[likebikes]

NASDAQ officially in "correction" territory!

[oldpotatoe]

Originally Posted by likebikes

NASDAQ officially in "correction" territory!

Pretty quiet at 1600 Pa. Ave...

[Jeff N.]

He's buying up everything on the cheap, will then announce an end to the trade wars, and watch his investments go through the roof? Maybe?

[Mr. Pink]

Dude, he has no real money. And he's destroyed his brand and his daughter's brand. Nobody will do business with them once he's a private citizen again.

[Tony T]

Originally Posted by Tony T

The Fed will save us.

Powell, Eyeing Trade War, Says Fed Will Act to Sustain Expansion

June 4, 2019
CHICAGO — Federal Reserve Chairman Jerome H. Powell said on Tuesday that the central bank is prepared to act to sustain the economic expansion should fallout from President Trump’s trade actions on China and Mexico threaten the United States economy.

[Tony T]

Originally Posted by Tony T

A little of both...
Last time (December) POTUS berated the Fed not to raise rates (it was expected then that there would be more rate hikes in 2019), and the Fed backed off and said (in Fedspek) that rates would not be hiked, and the market rallied.
I would not be surprised to see the Fed hint of a rate cut soon.

While Mr. Powell did not explicitly say that the Fed will cut interest rates, markets are likely to interpret his comments as a signal that the central bank is prepared to do so in order to offset any economic fallout from Mr. Trump’s ongoing trade wars.

[William]

A few folks veering into political rants...

While it can be difficult at times to separate political action and the market response, it can be done without descending into rants about political figures. Please keep it on topic.





Thanks,
William

[fa63]

It is almost as if the Fed is trying to create another bubble...

[sitzmark]

Originally Posted by froze

Obviously you have very little knowledge concerning the history of the stock market, that's ok because MOST people have very little knowledge about that stuff which is why most Americans don't get fully involved in their 401K's and 403B's at their work, so instead of learning about it and understanding it they decide to short cgoinghange their retirement substantially.

If you look back at the stock market going all the way back to the great depression the stock market resembles a person walking up a flight of stairs while playing with a Yoyo, the yoyo represents your investment it goes up and down, but while it's going up and down it continues to go up. Do the same thing with inflation except the person with the yoyo isn't making it go up and down he's just going up the stairs. Do the same thing with money in the bank and what you have now is a person walking on a level sidewalk with the yoyo barely moving. The money in the bank is not going to keep up with inflation, the money in the 401K or 403B is not only keeping pace with inflation but exceeding it. The problem with 401k's and 403b's is that there are very few people working in HR that understand that stuff either, so they don't advise, which means the worker has to figure it out on their own which most of the time that's where they fail if they invest in it at all. What the average worker does is put their money in a money market fund, which is paying only slightly more money than a bank but still won't keep up with inflation.

The sad thing about all that is that it really isn't rocket science, it doesn't take a Certified Financial Planner to tell you what to invest in, in fact I don't even agree with a lot of those people because they tend to be more conservative in their advice so as not to get screamed at when a big drop comes. I'm not saying I'm right and they're all wrong, but I find the highest rate of return over the last 10 years being offered by my plan, and that usually means it's the highest risk which means it could have big drops, so what? the reason over the last 10 years it outpaced the others was due to the risk factor, even with the larger drops at the end of the day it still outpaces all the others. I pretty much don't pay too much attention to the management fee because even a higher management fee will only be about 1% more than the lower ones, but if the mutual fund is performing better than percentage being charged vs others charging less than I'm ok with the higher fee.

I always try to find 2 mutual funds within my plan choices that are performing the best over the long haul. So right now as of today my YTD asset performance is at +19.84%, I don't see any banks doing that well. My plan, which may not have the same funds you can get, but the funds I selected was: JP Morgan Small Cap GR A and T Rowe Price Growth Stock ADV. Now those two are the best I could find out of my companies offerings, there maybe better ones out there that are not offered in my plan, but I'm showing you this to show you what I have so you can look up the performance yourself if you think I'm messing with you, and how I got to +19.84%. Over the last 10 years the JP one averaged 17.72 and the T Rowe averaged 16.94; I chose both of those because one is a small cap and the other a large cap like MS, FaceBook, Boeing etc, this mixture gave me a the best of the high risk small cap stocks and the high risk of an equity fund, but yet the risk in reality isn't that great when you look at the history of returns and my own return percentage. This is what people don't get, they think high risk means a chance at high loses, while can mean that, however if the stock market were to make a sizeable correction, say 16 to 20 percent drop, it will only take about 2 years to get that all back. The other thing about huge drops is that's not the time to become afraid and run to a money market or take out whats left and put it in the bank, that is the time to INCREASE your withholdings percentage which goes against the grain of thought that many people have, but it's the only way to recover faster than the next person and do it at very high interest gains because you are now buying for the next year, or two, maybe three, stocks at a much lower price and buying more shares than you could before the crash for the same amount of money, and all those extra shares you buy will go up with nosebleed interest earnings for you! Those two funds I have the expenses are not that much, the T Rowe is 0.92% and the JP Morgan is 1.34% (both are gross not net expenses), even though the JP Morgan is a tad high on the expense I have no other fund in my plan that has anywhere near the performance of that one, so even if I could find one with lower expenses I won't make up for the JP Morgan one because the 10 year history of earnings are significantly lower.

Where I veer a bit off from investor advisors is that, #1 I go for the highest historical return, I don't care about the risk, higher historical return usually means higher risk though but I don't care. #2 I don't even care that because I'm 66 that I need to go into safer funds in case something happens I won't have time to recuperate my loses; reason I don't care is because the recouping thing only takes about 2 to 4 years. #3 I don't care for another reason, this 403B I have is not my only investment, so even if I have to wait several years for it to recover I don't care because I have other investments that are paying me when I retire in 2 years, so it's sort of like the cherry on top of the ice cream type of thinking.s

If you have a 401K or 403B through your work you need to get involved ASAP to at least the level of what your company will match, if they don't match get involved anyways. If you are involved you need to relook at your fund selection and find a couple, not 3 or 4, just 2, that have been out pacing the others in your plan selection for the last 10 years. If you do not have a 401k or 403b offered through your work then go and check out several financial places where you live that offer IRA and check out who has the best funds (remember you only need 2) and go with that, they'll even auto deduct from your paycheck. The only thing you have be careful about when talking to a financial planner is that they could lead you away from your original funds you decided on, or lead you to some funds you haven't even had a chance to study about any fund they offered yet, and confusion sets in and you select what they tell you because they're the pros and they know what's best for you...now always true, they maybe getting and all expense paid trip to Italy if they sell X number of funds for a particular company, so they'll push that if they want the trip. Some will really confuse you with slicing your money into several different categories so in case in fund drops maybe another goes up, or a mix of stocks and bonds et etc etc, it's all just blah blah blah, remember they're job is not to scare you away with a high risk portfolio but to get you as a paying customer, and most people do feel comfortable with a low risk portfolio.

Again I'm not a professional at this stuff, just stuff I learned over the years on my own by observing how my 401k's and 403B's behaved, so I've watched this stuff for the last 40 plus years. All investments carry a degree of risk, I've seen people lose millions of dollars in California real estate when everyone said for years it's impossible to lose money in California real estate, well they did, and so could you in a 401K, but the chances are very slim that the market will crash 75% and never come back or take 40 years to recoup, if that were to happen we would have a lot worse things to be concerned with! The other thing when it comes to real estate, I don't buy real estate to speculate with, I buy it to have a home to live in and I bought rental property without ever thinking I was going to buy for the short term and sell at a profit; with that in mind, I don't care if real estate values fall because I wasn't looking to sell and make a profit.

There's a saying in investing .... "past performance may not be indicative of future results" That couldn't be more true at this time (IMO).

The market is being fueled by trending and collective fund investing (mutuals, SPDRs, etc.) because there is "no-where-else ["safe"]-to-put-money" and not being driven by underlying value ... the actual performance of the companies receiving the capital. P/E ratios are historically high. Some major corporations are sitting pretty with huge stashes of cash to buy back stock or make growth investments in R&D, new markets, etc.. For the majority long-term performance is way overvalued. The world is a changing and to roll along thinking it will always be as it has been (in our lifetime) is very risky.

Suggested viewing/listing: https://youtu.be/aI7EtfH9u4s

[unterhausen]

Originally Posted by sitzmark

The market is being fueled by trending and collective fund investing (mutuals, SPDRs, etc.) because there is "no-where-else ["safe"]-to-put-money" and not being driven by underlying value ... the actual performance of the companies receiving the capital. P/E ratios are historically high. Some major corporations are sitting pretty with huge stashes of cash to buy back stock or make growth investments in R&D, new markets, etc.. For the majority long-term performance is way overvalued. The world is a changing and to roll along thinking it will always be as it has been (in our lifetime) is very risky.

changing demographics and the pivot to video, uh, I mean the gig economy means that people in their 40's have no money. I think the people in this forum mostly had a decent amount of money by that age. I'm 60, and I'm old enough to remember when the stock market was a scary place, nothing like it is now with a nearly guaranteed return. The thing that is propping up values now is the money, not the underlying value of the company. It wouldn't be too surprising if we eventually hyperinflate our way out of this conundrum.

[Mr. Pink]

Originally Posted by William

A few folks veering into political rants...

While it can be difficult at times to separate political action and the market response, it can be done without descending into rants about political figures. Please keep it on topic.





Thanks,
William

Yeah, I was thinking about that, but, if you ask me, it's absurd to talk about market swings lately without mentioning politics. You certainly can't seperate it. But, I'm outta here, sorry, just happy to be in a nice mix of equities and bonds that actually took off recently in the midst of all this stupidity at the top. Who knows.

[sitzmark]

Originally Posted by unterhausen

changing demographics and the pivot to video, uh, I mean the gig economy means that people in their 40's have no money. I think the people in this forum mostly had a decent amount of money by that age. I'm 60, and I'm old enough to remember when the stock market was a scary place, nothing like it is now with a nearly guaranteed return. The thing that is propping up values now is the money, not the underlying value of the company. It wouldn't be too surprising if we eventually hyperinflate our way out of this conundrum.

Well some do and lots of it. But not a majority. The biggest wealth transfer in history is underway through inheritance via boomers to next generations, so (some) younger generations will eventually control much wealth. They also have a boatload of debt they don't even think about in addition to school loans, house loans and car loans, etc. The national debt is $22+ trillion ,which means about $65,000 for every US citizen. For the number of actual tax payers their share is about $180,000+ and only getting higher. As us old folk depart the payback numbers go up exponentially. Someone is eventually going to have to pay ... or let it default. Default came come in the form of defaulting what is owed to individuals/governments that own treasuries or the government could default on the promises made to US citizens and not fund the "entitlements" that encompass a large portion of the national debt. Some "defaulting" is already being discussed - extending qualifying ages for SS/medicare, means testing, and services curtailment. Liquidity everywhere is a panic attack away from drying up tighter than in 2007.

[Mr. Pink]

Oh man, I'll just drop back in for one more. Pr9mise it's the last.

Default to whom? We run the show. We can't default. We just print more money. Like the trillions in 08. No problem. Stop with the deficit scare.

[flydhest]

Originally Posted by Mr. Pink

Oh man, I'll just drop back in for one more. Pr9mise it's the last.



Default to whom? We run the show. We can't default. We just print more money. Like the trillions in 08. No problem. Stop with the deficit scare.

Agreed, but not sure why ‘08 is the reference. The tax cuts and increased federal spending from 17-18 show that the idea of fiscal responsibility is even more dead than one may have thought. The MMT debate is raging and people ask if it will be adopted. It has been. Tax cuts and higher spending financed through a deficit have carried the day.